Tony Hayward, chief executive of BP at a session at the World Economic Forum in Davos wher he spoke of gas extraction from shale. Photograph: Arnd Wiegmann/Reuters

A controversial method of extracting gas from shale rocks and coal seams pioneered in the US has been described by the head of BP as a "complete game changer" that would transform the future of energy in that country over the next 100 years.

Excitement in the industry over "unconventional" gas supplies has led to a wave of investment in America which Tony Hayward, BP's chief executive, believes could eventually spread around the world.

"[Unconventional gas is a] complete game changer in the US," he said in answer to a question at an energy summit which was part of the World Economic Forum in Davos, Switzerland. "It probably transforms the US energy outlook for the next 100 years. It's yet to seen if it can be applied globally."

BP inherited a major stake in shale operations when it took over Amoco 12 years ago, but has added to that by spending $1.75bn buying shale interests from rival Chesapeake Energy in the summer of 2008. Last November BP showed its determination to extend the use of the techniques when it signed a production-sharing agreement with the government of Indonesia to exploit new reserves in Kalimantan.

But the most recent signal that Big Oil was taking unconventional gas far more seriously was when Exxon Mobil agreed to spend $30bn buying XTO Energy, a leading US shale producer. Meanwhile, Britain's BG and America's ConocoPhillips are planning to exploit opportunities for coalbed methane in Australia.

There is also speculation that there could be shale-based gas schemes available in mainland Europe now that new drilling and extraction techniques have been proven in the US, largely Texas, Wyoming and Pennsylvania. Development of these reserves in major quantities has sent the price of natural gas spinning downwards in America but promises a much-sought increase in self-sufficiency. It also offers a lower carbon footprint than oil.

But the moves have unnerved traditional natural gas producers such as Gazprom of Russia. A board meeting of the Moscow-based giant this week centred on whether US unconventional gas sources meant its own investment plans to produce gas from the northern Yamal peninsula for part-export by ship to the US should be revised downwards.

Andrew Neff, energy analyst at IHS Global Insight, said there was no doubt shale gas was "playing havoc" with Gazprom's pricing formula as well as its investment timetables for key production and infrastructure projects. "The potential spread of the shale gas production revolution to Europe, which is believed to have significant untapped reserves of its own, would clearly have a profound impact on Gazprom's production and marketing strategy as well," he added.

Unconventional gas has burst to prominence as US-based oil companies – often led by smaller independents – have used new directional and horizontal drilling techniques to exploit new reserves. But rock formations have to be broken up with a mixture of water, sand and chemicals in a process called hydraulic fracturing.

Environmentalists have major reservations about these techniques, saying enormous amounts of water are needed and that the drilling can pollute local water tables. The Texas Oil and Gas Accountability Project has blamed hydraulic fracturing for making people ill and poisoning cattle by polluting water supplies, which is denied by the oil and gas industry.

The US Environmental Protection Agency increased pressure on the oil industry by revealing "serious reservations" about allowing shale gas drilling in parts of New York state for fear of threatening Big Apple water supplies.

The EPA has already found 14 "contaminants of concern" in 11 private wells surveyed in the Pavillion farming community of Wyoming; private tests in Pennsylvania have also indicated some pollution.

Industry officials say there is no documented case of water contamination from gas drilling, saying the chemicals used are heavily diluted and injected through pipes of steel to shale more than a mile underground. The industry accepts that large amounts of water are used, but says most of it stays underground and therefore does not have to be treated further.

But there are already bills being prepared for Congress that would tighten restrictions on unconventionals and Exxon has inserted a clause in its takeover documents for XTO that enable it to scrap the transaction if there were changes to the law that made hydraulic fracturing "illegal or commercially impracticable".